Shared Energy Resources
Innovation is driving the future of microgrids.
There is a familiar backstory in electric power generation that has influenced the industry over the 40 years since the Public Utilities Regulatory Policies Act of 1978 (PURPA) was signed into law. Industry veterans know this story and the younger generation is coming to learn it. Yet the story is evolving, and today, with new technology and business models, a new chapter is being written with the implementation of more efficient, flexible, and intelligent energy resources.
PURPA was, in large part, a reaction to the energy crises of the 1970s and resulted in a wave of power plant development that swept through the ‘80s and ‘90s. This included a large-scale rollout of cogeneration (cogen) plants that enjoyed favorable 20- to 30-year “PURPA contracts.” As the industry boomed, generators over-built. This, coupled with other regulatory factors, led to a lull in the investment of new infrastructure.
Subsequently, the landscape changed: Renewable costs dropped, energy efficiency technology improved, business models evolved to allow mass market adoption of solar, and renewable portfolio standards (RPS) were adopted. These technology advancements and new industry practices reopened the market for flexible, dispatchable energy generation projects.
Yet investment in energy infrastructure is struggling to keep pace with growing energy demand. The investment gap in electricity infrastructure is estimated to be $177 billion (Source: ASCE 2017 Energy Infrastructure Report Card). Many of the plants under PURPA contracts are reaching end-of-life and cannot be economically repowered using conventional approaches. The result is that infrastructure is at a once-in-a-generation inflection point.
The solution to much of what ails the grid appears to be the next wave of distributed energy resources (DERs), which are evolving to be deployed as grid-facing business models to fully utilize complex generation assets and power systems. Think Uber for electric power infrastructure. Welcome to the shared economy…cont.